Debt-to-Income Ratio

The debt to income ratio is a tool lenders use to calculate how much of your income is available for a monthly home loan payment after you have met your various other monthly debt payments.

How to figure your qualifying ratio

In general, conventional mortgage loans require a qualifying ratio of 28/36. FHA loans are a little less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of gross monthly income that can be spent on housing (including principal and interest, PMI, hazard insurance, taxes, and homeowners' association dues).

The second number is what percent of your gross income every month that can be applied to housing expenses and recurring debt. For purposes of this ratio, debt includes payments on credit cards, car loans, child support, etcetera.

For example:

With a 28/36 qualifying ratio

  • Gross monthly income of $8,000 x .28 = $2,240 can be applied to housing
  • Gross monthly income of $8,000 x .36 = $2,280 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $8,000 x .29 = $2,320 can be applied to housing
  • Gross monthly income of $8,000 x .41 = $3,280 can be applied to recurring debt plus housing expenses

If you want to run your own numbers, use this Loan Qualifying Calculator.

Just Guidelines

Don't forget these ratios are only guidelines. We will be happy to pre-qualify you to help you determine how much you can afford.

At AmeriBest Mortgage, we answer questions about qualifying all the time. Give us a call at 3217777277.

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